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Oi Vietnam - - Contents - Text by Wes Grover Im­ages Pro­vided by Mercedes-Benz Viet­nam

FOR MANY VIET­NAMESE con­sumers, it seems that lo­cally made prod­ucts are some­how con­fus­ing, due to a widely held be­lief that qual­ity goods have to be made over­seas. Try telling that to the brass at MercedesBenz Viet­nam, and you will see the other side of the story.

Over the past two decades, the Ger­man au­tomaker has more than dom­i­nated the lux­ury car sec­tor here, cur­rently hold­ing roughly 65 per­cent of the mar­ket share, and they at­tribute much of this suc­cess to their man­u­fac­tur­ing fa­cil­ity, lo­cated in Go Vap Dis­trict. Re­cently, we vis­ited the plant to learn more about MercedesBenz’s pres­ence in the coun­try and why they are the de­fin­i­tive fa­vorite among wealthy Viet­namese con­sumers.

Mak­ing the jour­ney across town, on a day of par­tic­u­larly con­gested streets, we ar­rive, we’re afraid to say, a few min­utes late, and it be­comes im­me­di­ately ap­par­ent as we clear a se­cu­rity check­point that this is a slice of Ger­man pre­ci­sion in the thick of Go Vap’s chaos. On these grounds, things are not run­ning on “Viet­namese time” and when Pa­trick Sch­wind, a Ger­man ex­pa­tri­ate who is the Head of Op­er­a­tions & COO of MercedesBenz Viet­nam, later speaks in his na­tive tongue with his Viet­namese driver, one starts to think maybe they are tak­ing this whole thing too far. As it turns out, the driver is in fact Viet Kieu from Ger­many, though per­haps that makes him more punc­tual than most.

A dis­ci­plined man with a pierc­ing gaze, Pa­trick is ex­actly the sort you would ex­pect to be run­ning the show, and he’s ready and wait­ing to talk pro­duc­tion. Only one third of their out­put, he in­forms us, are CBU cars (com­pletely built-up), and the rest are man­u­fac­tured right here, as­sem­bled en­tirely by man­power. Seem­ingly an odd­ity in to­day’s au­to­mated world, Pa­trick ex­plains that while their pro­duc­tion has been on an up­ward tra­jec­tory, it doesn’t cur­rently war­rant tran­si­tion­ing to a ma­chine-pow­ered as­sem­bly line.

This means that ev­ery step, from the paint job to the in­stal­la­tion of the dash­board’s high res­o­lu­tion dis­play screen, is done by hand. Even the act of mov­ing the car down the line is done by push­ing the ve­hi­cle along a se­ries of rollers. We watch as one gloved man re­peat­edly opens and closes a door for a good minute, in­tensely tak­ing note of the size of the gap be­tween the door and

the car it­self each time. As we work our way down the line, one can ob­serve the trans­for­ma­tion of a skele­tal frame to an au­to­mo­bile that, de­pend­ing on the model, can ul­ti­mately cost up­wards of VND10 bil­lion, a process that takes about two months from the mo­ment as­sem­bly be­gins to the fi­nal eval­u­a­tion of qual­ity on their in-house test track.

“We set up this fac­tory 22 years ago and, to this day, we’re the only pre­mium brand that has a man­u­fac­tur­ing fa­cil­ity in Viet­nam. Be­cause of that, I be­lieve we are in a very dom­i­nant po­si­tion in this mar­ket,” shares Choi Duk Jun, Man­ag­ing Di­rec­tor, as he goes on to shed some light on just who it is that’s pur­chas­ing these lux­ury rides. “Most of our cus­tomers are un­der 40 years old. The av­er­age is about 35, which is very young by most stan­dards. I dare say, it may be 10 years younger than the global av­er­age.”

Here, they pre­fer to see their prod­uct driven by the cus­tomers them­selves, rather than a chauf­feur, be­cause, as

Duk Jun puts it, “That’s the best way to ex­pe­ri­ence our cars and that’s the way to tell the big dif­fer­ence be­tween our cars and the oth­ers on the road. Not all cars are cre­ated equal.” Gen­er­ally speak­ing, their clien­tele agrees, as more and more are driv­ing their au­to­mo­biles them­selves. How­ever, the S-Class even takes over 80 per­cent of the lux­ury sedan mar­ket share in Viet­nam, is an ex­cep­tion that’s fa­vored by those who are chauf­feured.

A dif­fer­ent trend be­ing ob­served is the shift from sedans to SUVs, which holds true not just in Viet­nam, but around the world. To­day, SUVs ac­count for roughly a third of the cars on the road and it ex­plains the high de­mand for their GLC model, in­tro­duced last year with a start­ing price of VND1,879,000,000, ac­cord­ing to Mercedes-Benz Viet­nam’s web­site.

Duk Jun shared “be­cause it’s not only the best-sell­ing model within our prod­uct range at the mo­ment, but also the best-sell­ing pre­mium car—not SUV—pre­mium car.” In their eyes, it’s the per­fect form of trans­porta­tion in an ur­ban en­vi­ron­ment prone to flood­ing and vari­able road con­di­tions, com­bined with a de­sign that’s nei­ther mas­cu­line or feminine.

One of their most mem­o­rable sales was of a dif­fer­ent SUV, how­ever—the con­spic­u­ously lux­u­ri­ous and box-shaped G-63 AMG, or un­of­fi­cially known to some as the G-Wagon. “There was a cus­tomer who was al­ready an S-500 cus­tomer and he wanted to buy the

G-63 AMG,” Duk Jun re­calls. “I can still re­mem­ber he was so ex­cited that when the car ar­rived, we still had to get it ho­molo­gated, but he couldn’t wait. He and his wife came here and we told them it wasn’t ready for de­liv­ery, but he said ‘I need to see it.’ So, we brought the car up to the show­room and they were get­ting in it, touch­ing it and smelling it. And I’d feel that way, too, buy­ing the car of my dreams. You can’t wait.”

New Money

The de­mand for the ul­tra-luxe May­bach se­ries is an­other strong rep­re­sen­ta­tion of the en­thu­si­asm that driv­ers hold for Mercedes-Benz here. Launched two years ago, within the first 18 months, they had sold 100 units of the May­bach S-600, a car that at the time was priced at roughly VND9.6 bil­lion and has since gone up to VND14,169,000,000 due to the new spe­cial con­sump­tion tax ad­just­ment in 2016. De­pend­ing on the en­gine dis­place­ment, the tax paid on a pas­sen­ger car can now be as high as 60 per­cent, though they feel this is fur­ther tip­ping the scale in their fa­vor.

“Coin­ci­den­tally, head­quar­ters has for years been down­siz­ing the size of the en­gine, but max­i­miz­ing the out­put, and I’m pretty sure they did it for Viet­nam,” Duk Jun jokes. “Last year, when the taxes were ad­justed, we even ben­e­fit­ted be­cause we have a lot of en­gines that are small, even two liters and be­low, with quite strong out­put and we were ready for that, whereas the com­pe­ti­tion was not ready.”

Even the May­bach, with a par­tic­u­larly high en­gine dis­place­ment, con­tin­ues to re­main pop­u­lar af­ter the ad­just­ment. A month and a half ago, Mercedes-Benz Viet­nam ex­panded their of­fer­ings to in­clude the full range of the se­ries, adding the May­bach S-400 and S-500. At the time of the launch, there were signed or­ders for more than 50 units.

Yet, de­spite their suc­cess across the mar­ket, brand build­ing con­tin­ues to be a point of em­pha­sis. In Europe, where the three-pointed star logo is well-es­tab­lished, marketing ef­forts are fo­cused on tech­nol­ogy and in­no­va­tion, while in Viet­nam they want to fur­ther the aware­ness of what the em­blem sym­bol­izes. In do­ing so, one strat­egy has been to uniquely align them­selves with the coun­try’s most de­sir­able ho­tels.

“Ba­si­cally, ev­ery four and five-star ho­tel and re­sort has a fleet of our cars,” Duk Jun says. “We have a pen­e­tra­tion of close to 90 per­cent in the coun­try. That’s some­thing that is very unique to Viet­nam. I’m not aware of any other coun­try that has even 50 per­cent pen­e­tra­tion. We are very happy, be­cause they all want to have our cars right in front of their doorstep to demon­strate that they are also pre­mium.”

Celebri­ties, too, want a Mercedes-

Benz on their doorstep, as the man­ag­ing di­rec­tor spec­u­lates that 70 to 80 per­cent of the coun­try’s top stars drive their cars, a list that in­cludes singers like Le Quyen, and ac­tress/model, as well as Miss Viet­nam, Mai Phuong Thuy.

Look­ing at the broader scope of clien­tele, the lux­ury au­tomaker be­lieves de­mand for their prod­uct is re­ally just be­gin­ning. Wealthy con­sumers are of­ten cat­e­go­rized be­tween old and new money, and in a devel­op­ing coun­try like Viet­nam, the ma­jor­ity of high-net-worth in­di­vid­u­als fall into the lat­ter. Hav­ing not ac­cu­mu­lated their af­flu­ence over time, the up-and­com­ing gen­er­a­tion of self-made con­sumers is less likely to have ac­cess to the large amount of cash cur­rently re­quired to make a pur­chase of this mag­ni­tude.

“These are the peo­ple who are in the new econ­omy,” ex­plains Duk Jun with an eye on the fu­ture. “That’s why our de­mo­graphic is younger. They are earn­ing as they are pro­gress­ing. When the fi­nan­cial en­vi­ron­ment is more lib­er­al­ized here and peo­ple have easy ac­cess to leas­ing and other fi­nan­cial so­lu­tions, I be­lieve there will be a lot more op­por­tu­nity.”

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